Impact of organisational factors on the circular economy practices and sustainable performance of small and medium sized enterprises in Vietnam

Abstract

Internal organisational factors have been identified as barriers to adopt circular economy (CE) practices. However, empirical evidence is limited in this context, specifically on the impact on sustainable business performance, especially for emerging economies and small and medium sized enterprises (SMEs). To bridge this knowledge gap, this chapter draws from CE, human resource management, innovation and sustainability literature to develop and validate a theoretical model that examines the relationships between organisational constructs comprising of leadership, innovation and culture, and their impact on adopting CE practices to enhance sustainable performance of SMEs. A primary survey-based research method was used to capture responses from 205 SMEs employees in Vietnam, and analysed by employing the structural equation modelling technique. Our results show that Vietnamese SMEs can effectively adopt CE practices to achieve sustainable business performance through innovation, developing skills and competencies, and creating a collaborative culture, which is influenced by the organisational leadership. Our research conclusions will equip managers, government policymakers and higher education institutions with evidence and strategies to adopt sustainable practices by overcoming organisational barriers.